Illegal HFC trade ‘flourishing’ in Europe

A new report from the Environmental Investigation Agency (EIA) has revealed the startling extent of Europe’s illegal HFC activity.

The report, Doors Wide Open, is the result of surveys conducted in late 2018 with EU member states and key industry stakeholders.

“Reports from industry indicate that large-scale illegal HFC trade and use is occurring in an absence of effective enforcement by member states,” says the EIA. “More than 80 per cent of companies surveyed were aware of or suspected illegal HFC trade, and 72 per cent had seen or been offered refrigerants in illegal disposable cylinders.”

European countries have struggled with the dramatic step change in HFC quotas enforced by the F-gas Regulation. This mapped out major reductions in 2018 and 2021. Unlike Australia, Europe also includes refrigerant in pre-charged equipment in its quota, increasing market pressures. In 2017, in anticipation of the 2018 supply cut, HFC prices skyrocketed.

Various reports of refrigerant smuggling and theft have emerged over the past 18 months. Recently, 25 tonnes of refrigerant including R134a, R404A and R410 and worth about €600,000 (Au$950,000) was seized by customs officials in Poland.

Days earlier, more than a tonne of refrigerant, again including R134a and R404A, was intercepted by customs officers in Bulgaria.

The EIA report mentions other specific examples of smuggling in Europe. Some is “open”, where companies exploit weaknesses in the quota enforcement system to import additional HFCs though the normal customs channels. More traditional smugglers work outside customs channels or hide the HFCs.

Put together, these forms of smuggling are pushing Europe above its HFC quota.

“Customs data for 2018 demonstrates that a large number of EU member states significantly increased HFC imports, despite the major HFC supply cut of 37 per cent,” says the report.

“EIA’s analysis of European customs data indicates that bulk HFC imports in 2018 were too high for compliance with the 2018 quota. If EU-based HFC production and equipment authorisations are assumed to be at 2017 levels, the amount of HFCs placed on the market in 2018 would be 117.5Mt CO2e, some 16.3Mt CO2e above the available quota of 101.2Mt CO2e.”

The EIA also found that some countries – potentially “hot spots” for the entry of illegal HFCs into the EU – significantly increased HFC imports in 2018, despite the 37 per cent supply cut enforced by the F-gas Regulation.

Austria, Belgium, Denmark, Greece, Ireland, Latvia, Malta, Poland, Portugal, Romania and Sweden all registered imports 100 per cent higher than in 2016.

The report recommends the implementation of a per-shipment HFC licensing system. This would allow customs officials to obtain real-time information to confirm that HFC imports are within the specified quota for a particular company.

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